West Coast ports are facing severe disruptions as union workers orchestrate a work slowdown in response to failed negotiations with port management. The International Longshore and Warehouse Union (ILWU) workforce’s deliberate reduction in productivity has brought ground port operations to a crawl, leading to a significant backlog of containers waiting outside port limits.
Supply chain intelligence company, MarineTraffic, has reported a notable surge in the average number of containers awaiting clearance. At the Port of Oakland, during the week of June 5, the average ton equivalent units (TEUs) waiting off port limits rose from 25,266 to 35,153. Similarly, at the Port of Los Angeles and Long Beach, the average TEUs waiting off port limits increased from 21,297 to 51,228, according to a spokesperson from MarineTraffic.
Based on a value of $61,000 per container and customs data, the combined 86,381 containers floating outside the ports of Oakland, Los Angeles, and Long Beach represent a staggering $5.2 billion worth of goods caught in the disruption.
Data exclusively obtained by CNBC from container shipment tracker Vizion reveals that the clearance rate for containers at the Port of Oakland over a seven-day period stands at a mere 58%. Similarly, at the Port of Long Beach, the rate is 64%, while at the Port of Los Angeles, it stands at 62%.
The work slowdown has had a profound impact on the flow of goods, with importers and exporters facing significant delays in moving their cargo. Industries reliant on efficient supply chains, such as retail, manufacturing, and agriculture, are feeling the brunt of the disruption, with ripple effects expected to reverberate throughout the economy.
Negotiations between the ILWU and port management have reached an impasse, leading to growing frustrations among workers and management alike. Both sides must now find a way to resume negotiations and seek a resolution to the ongoing labor dispute. The immediate priority is to restore normal operations at the affected ports and alleviate the congestion crisis, allowing the movement of goods to resume smoothly.
The prolonged disruption has underscored the vulnerability of the global supply chain and highlights the need for contingency plans and measures to address potential labor disputes in the future. Stakeholders across industries are closely monitoring the situation, hopeful for a swift resolution that will restore the smooth functioning of West Coast ports and mitigate the adverse impact on trade and economic activities.